Forex Today: USD rallies as Senate clears tax reform hurdle, T-yield rise & Kiwi drops below 0.70 levels


FX desks in Asia put a bid under the US dollar as the Senate's decision to approve a budget blueprint for the 2018 fiscal year has made way for the GOP to enact a tax-cut package without Democratic support. Tax cuts are widely seen as inflationary, thus the long duration treasury yields strengthened. The yield curve steepened to 80 basis points and the USD index rose to 93.50 levels. The other big news in Asia was the drop in the NZD/USD pair below 0.70 handle. Investors are unclear about the RBNZ's mandate under the new government, thus NZD is being offered across the board.

Main topics in Asia

US Senate adopts budget resolution, sets stage for tax reform

UK PM Theresa May urged EU to create 'new dynamic' in Brexit talks

A report from BBC says, "Theresa May has urged EU leaders to create a "dynamic" in Brexit talks that "enables us to move forward together", at a working dinner in Brussels."

USD/JPY clocks 2-week high of 113.19 as T-yields rise on the US tax reform news

The Dollar-Yen jumped to two-week high as the steepening of the treasury yield curve on US tax reform news boosting the demand for the greenback. Also worth noting that JPY tends to strengthen on Friday on fears of escalation of crisis in the Korean Peninsula over the weekend. 

Kiwi bears eye 0.6908, 11th April low

NZD is being offered on uncertainty regarding the RBNZ's mandate under the new government.

Looking ahead

European desks may keep the USD well bid on the tax reform news. EUR and GBP are likely to feel the heat of the political uncertainty (Catalonia crisis and Brexit deadlock). GBP/USD could slide to 100-DMA level of 1.3045 on speculation that EU leaders will express concerns regarding the lack of progress in Breit negotiations.

Political uncertainty is likely to overshadow data releases in Europe - EZ PPI (Sep) and Current Account (Aug). In the North American session, CAD retail sales and US existing home sales are due.  Fed's Yellen speech may not move the markets today.

EUR/USD drops 0.30 percent as the yield differential widens

The US-German 10-yr yield spread is rising on US tax reform news. Thus, EUR/USD may remain on the back foot. EZ PPI unlikely move markets, focus on European Council Meeting. 

ECB: Lower for longer 2.0 - ING

The Eurozone economy has not changed since the September ECB meeting and even though the results of the German elections have somewhat dampened the eu(ro)phoria of the summer months, survey indicators still point to a continuation of the recovery well into 2018.

GMT
Event
Vol.
Actual
Consensus
Previous
Friday, Oct 20
06:00
 
0.1%
0.2%
06:00
 
2.9%
2.6%
06:35
 
 
07:00
 
 
0.3%
08:00
 
€26.2B
€25.1B
08:00
 
 
€32.5B
08:30
 
 
£5.093B
n/a
 
 
11:30
 
 
$398.79B
12:00
 
0.35%
0.11%
12:00
 
6.4%
6.5%
12:30
 
0.3%
0.2%
12:30
 
0.5%
0.4%
12:30
 
0.3%
0.1%
12:30
 
1.6%
1.4%
12:30
 
0.3%
0.1%
12:30
 
 
0.9%
12:30
 
 
0%
13:00
 
3.3%
3.3%
13:00
 
3.6%
3.5%
14:00
 
5.30M
5.35M
14:00
 
-1.0%
-1.7%
17:00
 
 
743
18:00
 
 
19:30
 
 
$200.1K
19:30
 
 
£15.5K
 

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD pressured in critical daily resistance ahead of ECB

EUR/USD is flat in the open this week at 1.1645 at daily resistance with the US dollar trying to hold up. Investors have taken profits since the dollar index hit a one-year high last week as they build expectations for sooner rate increases in other currencies.

EUR/USD News

GBP/USD: Buyers defends 1.3750 below 100-day SMA

GBP/USD edges higher on the first trading day of the week in the Asian trading hours. The pair faces strong resistance near 1.3850 below the bearish sloping line. MACD signals sideways momentum with the underlying neutral sentiment.

GBP/USD News

EUR/USD pressured in critical daily resistance ahead of ECB

EUR/USD is flat in the open this week at 1.1645 at daily resistance with the US dollar trying to hold up. Investors have taken profits since the dollar index hit a one-year high last week as they build expectations for sooner rate increases in other currencies.

EUR/USD News

SafeMoon price presents a buy opportunity before 35% gains

SafeMoon price coils up under a crucial resistance level at $0.00000239. A sudden burst in buying pressure that shatters this barrier can kick-start a 35% ascent. In some cases, SAFEMOON could pull back to $0.00000198 or $0.00000175 support floors.

Read more

Wall Street Week Ahead: Huge week of earnings ahead AAPL, MSFT, GOOGL, AMZN, FB

Equity markets remain elevated with more all-time highs on Thursday for the broader S&P 500 while the Dow registered new highs on Wednesday and Thursday. So far late into Friday's session, the markets are seeing some profit-taking to end a solid week.

Read more

Forex MAJORS

Cryptocurrencies

Signatures